Evidence of Impact
The Learning and Development (L&D) function faces increasing pressure from business leaders to provide meaningful metrics that demonstrate its value to the organization. For years, L&D has measured the number of courses it offers, employee satisfaction with its courses, the number of employees that took them, and the number of hours people spent learning. None of these metrics is strategic to the business.
Ironically, boasting to business leaders about how much training is happening and how well people like it can be risky. An employee’s productivity is zero when taking a course. Executives may question whether too much training is draining productivity. So, how can L&D tap into the metrics that will satisfy its funders?
A learning and performance ecosystem is fueled by the strategic initiatives and metrics that are most important to leadership. Convincing executives to invest in building the skills, processes, content, and technology that enable a comprehensive ecosystem requires justification. The best way to build strong sponsorship for growing and sustaining your ecosystem is to focus on business metrics.
Human Performance Metrics
Can L&D prove for certain that it is having a direct impact on revenue earned, units sold, customer loyalty, and other business metrics? It can’t. It can only provide evidence of impact. The best evidence links data about an L&D solution to human performance metrics, which in turn link to business metrics. It all starts with a clearly defined and measurable business problem.
A manufacturing company is its inventory effectively, driving up costs and narrowing profit margins. The executive in charge asks L&D whether it can train people to manage inventory better.
Should L&D respond to the executive’s request in this example with a Training Needs Analysis and a series of new courses on inventory management? Not in the ecosystem. A Training Needs Analysis assumes that training alone will fix the problem. It explores what people need to know in order to do their jobs. That would be a traditional training response.
The ecosystem response is different. It has a sharper focus that applies performance analysis to shed light on the business problem, how it is measured (business metric), the key job roles and tasks that most impact the business problem, and how they are measured (performance metrics.)
Performance analysis is critically important to ecosystem projects. This is the phase where L&D discovers all the specifics of the business problem, including what should be happening, what is happening, and why. It is also the phase where L&D identifies the business and performance metrics its solution must impact.
Step 1: Define The Business Problem And Metric(s)
Performance analysis involves talking with people at all levels, including executives, managers, and employees on the shop floor. Everyone has a piece of the mosaic. The performance analyst’s role is to capture all the pieces and see what picture emerges. The picture informs an effective ecosystem solution and identifies the metrics that will be used to provide evidence of its impact.
The analysis begins with a clearly articulated problem statement and the metric business leaders use to measure it. A good way to get started is through a short, incisive conversation with the business leader that requested L&D’s help.
Question 1: What is the nature of the problem with inventory management?
Answer 1: There should be just enough inventory. If it’s not available when needed, it holds up production. If it’s on the shelf too long waiting to be used, it takes up too much space and can be harder to track.
Question 2: How do we know we have a “just enough inventory” problem and how will we know when it is no longer a problem?
Answer 2: The business metric used to measure this is called “days on hand.” Our target for this metric is 3 days, with no more than 2 days’ variability. Right now, the average number of “days on hand” is 17. This is way too high and varies widely depending on the factory and production line.
Question 3: Who can we meet with to find out more about what factors might be contributing to the problem and which job roles are involved?
Answer 3: You should meet with…
Through this first conversation, you have gained a problem definition, business metrics, and permission to continue the performance analysis by meeting with other key players. At each meeting, you can ask for additional people to meet with until you have enough information to recommend an ecosystem solution.
Step 2: Identify The Human Performance Problems And Metrics
The next step is to determine what role human performance plays in causing the problem, how the performance is managed, and what job roles are involved. Your meetings with various levels of management and non-management should allow you to get answers.
Question 1: What human performance challenges have the greatest impact on having just enough inventory?
Answer 1: The three biggest problems are forecasting, shipping, and tracking our inventory. It is difficult to forecast accurately how much inventory will be needed based on sales projections. We also do a lot of expedited shipping when inventory is not available when and where it’s needed. We don’t always know what inventory we have on hand because it is classified improperly or misplaced.
Question 2: How do we measure these problems?
Answer 2: We have metrics for forecast accuracy, shipping efficiency, and inventory accuracy.
Question 3: What job roles are involved in forecasting, shipping, and counting inventory?
Answer 3: Plant managers, inventory managers, sales and inventory planners, and freight administrators.
Discussions with managers and experts in various areas may be needed to get this information. But, once you have it, you’ve got the keys to your ecosystem project: job tasks with performance metrics that impact the business metric.
Step 3: Determine What Factors Are Causing The Human Performance Problem
Finally, it is important to talk with people in the affected job roles to list factors that are contributing to these problems. If the list is long, convene a panel of experts from the business who can prioritize their impact on the performance metrics.
- People don’t follow the proven process for sales inventory operations planning.
- Ineffective and untimely communications with sales.
- Shipping vendors are not accountable for late shipments.
- People have different opinions on whether an item should be classified as raw materials, work in progress, or finished goods.
In our example, the business metric is “days on hand,” which describes how long inventory is available before it is used. The human performance metrics are forecast accuracy, shipping efficiency, and inventory accuracy. They measure things people do. The business owns these metrics and they are the link between the performance and business metrics. L&D can now design and implement a solution. L&D can measure the solution’s adoption and usage patterns by people in the key job roles that were identified during performance analysis.
Performance analysis identifies the metrics that will form a chain of evidence to demonstrate the L&D solution’s strategic impact. An effective way to visualize this chain of evidence is with a dashboard that shows the business metric, performance metrics, and L&D solution metrics side by side. By using metrics this way, L&D increases its business acumen, builds credibility with business leaders, and enhances its value to the business.